NERC report shows Discos accomplished just 12% of metering roll out in 2016

Nigeria and the World Bank Group would meet this week in Washington D.C. to discuss and possibly conclude operational terms in the power sector recovery plan, which both parties have worked on and agreed to use to respond adequately to the current challenges threatening Nigeria's electricity sector.

THISDAY learnt on Sunday in Abuja that the Minister of Power, Works and Housing, Mr. Babatunde Fashola, will lead a team comprising key officials in his ministry and the Office of the Vice President to the meeting which is expected to hold on the sidelines of the annual World Bank/International Monetary Fund (IMF) spring meetings.

Reliable sources that are privy to this, confirmed that the meeting was purposely arranged to hold at the time of the spring meetings which will hold between April 21 and 23.

The sources explained that Nigeria and the World Bank would take time out to discuss key factors in the implementation of the power sector recovery plan.

Just last week, Fashola confirmed that the Federal Executive Council (FEC) had approved the plan for use, paving the way for Nigeria and the Bank to conclude discussions on the plan.

However, total funding under the plan has not been disclosed by either the federal government or the Bank.

Last December, THISDAY had reported that the government and the Bank were working on a recovery plan that would among other objectives seek to improve the technical and commercial performance of the country's privatised power sector, as well as restore its business viability.

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The recommendations in the plan were reportedly based on a joint diagnostic exercise conducted on the sector by the government and the Bank.

Even though the government recently approved a N701 billion payment guarantee to the Nigerian Bulk Electricity Trading Plc (NBET) to support its financial commitments to power generation companies (Gencos) in the country, Nigeria's electricity market still contends with illiquidity, which analysts said could lead to total market failure if not addressed.

Based on this, THISDAY learnt that the recovery plan was originated to turnaround the sector by helping to improve its governance practices, reduce technical and commercial electricity losses, and guarantee efficient sector investments.

When the plan was being worked on, the government and the Bank reportedly agreed that there were causes and dimensions to the challenges of the sector, and that the sector needed urgent attention to restore its financial tolerance to attract significant private sector investments.

It was further learnt that the World Bank would from this galvanise private and public sector investments through its various groups to support the power sector.

Also, both parties agreed on the need to prioritise actions that will strengthen the sector's governance including the appointment of Commissioners for the Nigerian Electricity Regulatory Commission (NERC) which has already been done, restore investors' confidence, attract public and private investment in generation, transmission, and distribution for enhanced service quality, and protect sector revenues with improved metering and collection.

The sources revealed that the planned Washington meeting would have other arms of the World Bank including the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) in attendance.

They explained that a couple of new generation projects like the solar power projects, for which the government has signed Power Purchase Agreements (PPAs) in July 2016, need the backing of the World Bank's Partial Risk Guarantee (PRG) to move to closure, but have been held back and are waiting for the recovery plan to be launched.

Meanwhile, a report presented by NERC to power sector operators at their last monthly meeting in Oshogbo, Osun State, indicated that the 11 Discos performed woefully with meeting their metering plan in 2016.

NERC stated that while the Discos committed to add 1,754,800 meters in 2016, they only rolled out 215,424 meters, representing 12 per cent of the target.

The report showed that while Ibadan Disco provided the most number of meters - 67,473, representing 27 per cent of its metering commitment for 2016, Enugu Disco was the worst performer with just 2,356 meters, representing one per cent of its commitment for last year.

NERC also explained that there was a sharp decline in revenue remittances to the market by the Discos in 2016, with remittances to NBET falling from 51 per cent in 2015 to 26 per cent in 2016.

It said this was still causing major liquidity problems for the market.

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